The scarcity of U.S. trade surpluses

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Snapshot for September 1, 1999

The scarcity of U.S. trade surpluses

Although the total U.S. trade deficit grew to $229 billion in 1998, the United States does have trade surpluses with a few countries, as shown in the first figure below. Unfortunately, the countries with which the United States runs a trade surplus do not promise much future trade growth. Only three of the 10 countries that ran a trade deficit with the United States in 1998 also had deficits at the beginning of the decade in 1991 (Brazil, Saudi Arabia, and Hong Kong).

The second figure shows the top eight trade surplus industries. The combined surplus of these industries was $101 billion in 1997 (the most recent year for which data are available). While most of the surplus industries involve high-technology and high-wage production (aircraft, chemicals, construction machinery, scientific instruments, and engines and turbines), the United States is also a net exporter of three major commodity products – cash grains, meat packing products, and cigarettes. The downside is that competition in commodity markets is price based and generates few high-wage jobs.

The United States’ dependence on commodity exports, the steady erosion of output and employment in high-wage, high technologies industries, and the escalating total U.S. trade deficit are stark indicators of the failure of U.S. trade and industrial policies to nurture and sustain our international competitiveness